Two of the three remaining bidders for the Aqueduct casino project have been disqualified, leaving a Malaysian-based company as the sole bidder left in the running.

But Genting New York is still not guaranteed the rights to the Aqueduct casino, which has been delayed by a remarkable array of legal and political twists since the Legislature first approved the gambling facility nine years ago.

The state Lottery Division, which is running the racino bidding process, said two different bids—by Penn National Gaming and by a separate consortium led by SL Green, Hard Rock Entertainment and Toronto-based Clairvest Group—were disqualified after failing to “conform” with the bidding requirements. Read Lottery Division release on reasons each was disqualified

But all is not as it seems in the chaotic process that has caused three different gubernatorial administrations in New York to be involved in the Aqueduct casino bidding project. The latest moves threaten to delay final action until 2011—when yet another new gubernatorial administration takes office Jan. 1.

Though Genting on the surface would appear to be the sole survivor of the bidding wars, its selection is far from certain. The company, owned by Genting Malaysia Bhd., will still have to be tapped by the Lottery Division and then by Gov. David Paterson and the heads of the state Legislature in a unanimous vote. It is far from certain to happen at this point.

Gordon Medenica, the lottery director, said in a statement July 6 that Penn National and the consortium led by SL Green “did not conform with the requirements of the competition and, instead, attempted to negotiate for terms more favorable to the bidders.”

The decision creates more uncertainty for the Aqueduct casino, which horsemen, breeders and the New York Racing Association have been counting on to provide a positive shot to the industry in the state. The casino is approved for at least 4,500 slot machines. The state is banking on at least $1 million a day in revenue-sharing proceeds, and the racing industry sees the casino as providing a counterpunch to competition to purse offerings in neighboring states.

State lottery officials would only say that Genting appears to “conform with all requirements” of the bid details.

Bidders have raised concerns that a minimum $300 million upfront payment from the winning casino developer to the state is not refundable—whether or not final terms are agreed to between the winning bidder and the state. There are also worries the state will change future revenue-sharing arrangements to make the winning bidder’s deal less profitable and concerns about a possible casino—maybe owned by a Long Island Indian tribe—at nearby Belmont Park racetrack that would dilute the Aqueduct casino investment.

The state, under the latest bidding procedure, expects to name the Lottery’s selection by Aug. 3.